SUPPLY & VALUATION - by r.renugan GST in india

components… TAXABLE EVENT PERSON LIABLE TO TAX RATE OF TAX GST in INDIA components… TAXABLE EVENT PERSON LIABLE TO TAX RATE OF TAX VALUE ON WHICH TAX IS PAYABLE TIME OF SUPPLY PLACE OF SUPPLY

TODAY… DUTY / TAX TAXABLE EVENT CUSTOMS IMPORT / EXPORT CENTRAL EXCISE GST IN INDIA TODAY… DUTY / TAX TAXABLE EVENT CUSTOMS IMPORT / EXPORT CENTRAL EXCISE MANUFACTURE SERVICE TAX PROVISION OF SERVICE VAT INTRA- STATE SALE CST INTER - STATE SALE ENTRY TAX ENTRY OF GOODS

UNDER GST… ON SUPPLY OF GOODS ( EXCEPT LIQUOR) SINGLE TAXABLE EVENT GST IN INDIA UNDER GST… ON SUPPLY OF GOODS ( EXCEPT LIQUOR) SINGLE TAXABLE EVENT TAX ON “SUPPLY” - NOT DEFINED IN CONSTITUTION MEANING & SCOPE - SEC 3 OF Model GST Law

SCOPE of “supply”… Section 3(1) - Supply includes (a) All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, (b) Importation of services, for a consideration whether or not in the course or furtherance of business (c) a supply specified in Schedule I, made or agreed to be made without a consideration.

Matters to be treated as “Supply” even without consideration scope of supply… Matters to be treated as “Supply” even without consideration Schedule I 1. Permanent transfer/disposal of business assets where input tax credit has been availed on such assets 2. Supply of goods or services between related persons or another establishment of the same legal entity which is required to take separate registration in the same state or another state 3. Supply of goods— by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal 4. Importation of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

scope of supply… schedule - II,III & iv Schedule II - Determination of supply of goods or services Section 3(3) - Neither goods nor services (a) activities or transactions specified in Schedule III (b) activities or transactions undertaken by Government specified in Schedule IV Section 3(4) - Empowers the Government to notify any transaction as (a) either goods or services (b) neither goods nor services Section 3(5) – Tax liability of “ Composite Supply and Mixed Supply”

stock transfers… scope of supply… GST is levied on supply of goods or services Normally, supply pre-supposes existence of two distinct persons- Supplier and Recipient In the case of stock transfer, supply is between the same entity and hence not taxable Exception - Schedule I of CGST/SGST Act Supply of goods or services between distinct persons as specified in Section 10 Supply of goods by a principal to an agent Supply of goods by an agent to his principal Importation of goods or services

supply … time of “supply”… The liability to pay GST arise only when supply is made The time of supply fixes the point when the liability has to be discharged The time of supply differs for supply of goods and supply of service Section 12 and 13 of Model GST Law prescribes time of supply for goods and services respectively

goods… Time of supply - General principles for goods Removal of goods Issue of invoice Receipt of payment Time of supply - For specific goods Continuous supply of goods Supply of vouchers Reverse charge Residual provision

services… Time of supply - General principles for services Issue of invoice Receipt of payment Time of supply - For specific services Continuous supply of service Supply of vouchers Reverse charge Residual provision

before rate change… SITUATION TIME OF SUPPLY DATE OF INVOICE INVOICE ISSUED & PAYMENT RECD AFTER RATE CHANGE EARLIEST OF DATE OF PAYMENT OR DATE OF INVOICE INVOICE ISSUED BEFORE & PAYMENT RECD AFTER RATE CHANGE DATE OF INVOICE PAYMENT RECD BEFORE & INVOICE ISSUED AFTER RATE CHANGE DATE OF PAYMENT

AFTER rate change… SITUATION TIME OF SUPPLY DATE OF INVOICE INVOICE ISSUED & PAYMENT RECD PRIOR TO RATE CHANGE EARLIEST OF DATE OF PAYMENT OR DATE OF INVOICE INVOICE ISSUED AFTER & PAYMENT RECD PRIOR TO RATE CHANGE DATE OF INVOICE PAYMENT RECD AFTER & INVOICE ISSUED PRIOR TO RATE CHANGE DATE OF PAYMENT

VALUATION… PRINCIPLES… Determination of value is not only required to determine the GST payable but also to compute the turnover for threshold limit or Composition Scheme GST Law proposes to adopt the concept of transaction value for determining the taxable value of supply or service

VALUATION… GST IN INDIA As per section 15 of Revised Model GST law, the taxable value is the price actually paid or payable for supply of goods or services The taxable value shall include: Any amount that the supplier is liable to pay but incurred by the recipient and not included in the price Incidental expenses such as commission, packing , etc, charged by the supplier Any taxes, duties, cesses, fees and charges levied under any statute charged by the supplier other than the GST Interest or penalty or late fee for delayed payment Subsidies, except the subsidy provided by the Government

GST IN INDIA VALUATION… The taxable value shall not include “discounts” given before or at the time of supply, if such “discount” is shown in the invoice “Post supply discount” also not includible, If it is established in terms of an agreement and known before or at the time of supply and ITC has been reversed by the recipient

GST IN INDIA VALUATION… If the value could not be arrived at as per Section 15(1), then the same will be determined as per the provisions of Valuation Rules Since the draft Valuation Rules released along with the earlier Model Act has not been revised, it is presumed that it still holds good Non monetary consideration Related party transactions Comparable method Computation method Pure agent

place of “supply”… The need for ascertaining Place of Supply (POS) The dual tax in a federal setup demands exact determination of POS In the case of intra-state supply, Centre and States are empowered to levy CGST and SGST respectively In the case of inter-state supply, the Centre is empowered to levy IGST The import and export of goods and services are deemed to be considered as inter state supply Therefore, determination of place of destination is vital

supply … place of “supply”… Goods, being tangible in nature, do not pose significant problems for determining the place of destination The only challenge in the case of goods is e-commerce based trading of goods and supply to third parties However, in the case of services, it is difficult to determine the place where the services are acquired, enjoyed and consumed

place of “supply”… supply … The determination of POS becomes more complex in certain category of services Sale of pre paid cards - location of service receiver Broadcasting service or roaming telecom service - The place where the service is consumed Construction of Railway line, National high way or Bridge which originate in one State and end in the other State The card issued by Delhi Metro could be used by a person located in Delhi or Noida or Faridabad Catering service provided on board Separate POS for goods and services

goods… place of supply … When goods are moved - Location of goods at the time at which the movement terminates for delivery to the recipient If the goods are delivered to a recipient on the direction of a third party – Principal place of supply of third party Without involving movement of goods – Location of goods at the time of delivery to the recipient Assembly of goods at site – Place of installation Supplied on Board a conveyance – The location at which the goods are taken on board Import of goods – location of importer For export of goods – Location outside India

services… place of supply … Supplier and recipient of services located in India General Rule - Provided to registered person – location of recipient Unregistered person - If address exist – Location of recipient If address not available- Location of supplier of service For specific services- Services relating to immovable property, Accommodation by hotel, guest house, boat house, etc, Mandap or convention service – Location of immovable property Restaurant & catering service, Beauty treatment, Health & fitness service, Health services – The place of performance Training and performance appraisal – Location of registered person Place of performance in case of unregistered person

services… place of supply … Admission to cultural, entertainment event, etc or amusement park – Place of performance or location of amusement park Event management or Exhibition service – Location of registered person Place of performance in case of unregistered person Transportation of goods, Courier- In other cases-Place of handing over of the goods for transportation Passenger Transportation - In other cases-Place of embarkation Services on board a conveyance such as aircraft, train, vessel, etc – Location of the first scheduled point of departure

services… place of supply … Telecommunication service, broadcasting service, DTH service- Services provided through fixed lines – Location of such fixed lines Mobile connection on post paid basis – location of billing address Pre payment basis - (a) Location of selling agent (b) In other cases of pre payment – Location where pre payment is made In other cases – Address of the recipient If address not available – Location of provider of service Banking and financial service, stock broking service- Location of recipient of service If address not available- Location of service provider Insurance service- Location of registered person In other cases, location of recipient of service Advertisement service to Central or State Government or Local authority – Location of each state where the services are disseminated

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